Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
FASTCOMM COMMUNICATIONS CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
FASTCOMM COMMUNICATIONS CORPORATION
45472 HOLIDAY DRIVE
STERLING, VA 20166
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON , 1997
------------------------
To the Shareholders of
FASTCOMM COMMUNICATIONS CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of FastComm
Communications Corporation, a Virginia corporation (the 'Company' or
'FastComm'), will be held on , 1997, at 9:00 a.m. local time, at
the Holiday Inn, Holiday Drive, Sterling, Virginia for the following purposes:
1. To elect four (4) directors of the Company;
2. To consider and act upon a proposal to Amend the Articles of
Incorporation for authorization of shares of Preferred Stock;
3. To consider and act upon a proposal to approve the issuance of
shares of Common Stock underlying the corporations convertible Debentures
and certain Warrants.
4. To consider and act upon a proposal to approve an Employee Stock
Purchase Plan; and
5. To ratify the appointment of BDO Seidman, LLP as the independent
auditors for the Company for the fiscal year ending April 30, 1998;
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
All shareholders are cordially invited to attend the meeting, although only
shareholders of record at the close of business on , 1997, are
entitled to notice of and to vote at the meeting.
Shares can be voted at the meeting only if the holder is present or represented
by Proxy. If you do not expect to attend the meeting, you are urged to date and
sign the enclosed proxy and return it in the accompanying envelope promptly, so
that your shares may be voted in accordance with your instructions and the
presence of a quorum may be assured. The prompt return of your signed proxy,
regardless of the number of shares you hold, will aid the Company in reducing
the expense of additional proxy solicitation. The grant of your proxy does not
affect your right to vote in person in the event you attend the meeting.
By Order of the Board of Directors
ROBERT C. ABBOTT,
Secretary
Sterling, Virginia
Dated: , 1997
YOUR VOTE IS IMPORTANT
You are cordially invited to attend the Annual Meeting in person. However,
whether or not you plan to attend, you are requested to complete, sign and
date the enclosed proxy card and return it promptly in the enclosed,
self-addressed stamped envelope, which requires no postage if mailed in the
United States. If you attend the Annual meeting and so desire, you may
revoke your proxy and vote your shares in person.
FASTCOMM COMMUNICATIONS CORPORATION
45472 HOLIDAY DRIVE
STERLING, VIRGINIA 20166
AMENDED PRELIMINARY PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by FastComm Communications Corporation, a Virginia corporation (the
'Company' or 'FastComm'), for use at the Annual Meeting of Shareholders of the
Company to be held on , 1997, and at any and all adjournments of
such meeting. The Company will bear the cost of this solicitation of proxies.
Such costs are expected to be nominal.
This Proxy Statement and the accompanying proxy card are being mailed to
shareholders commencing on or about , 1997.
RECORD DATE; VOTING SECURITIES; QUORUM; BROKER NON-VOTES
, 1997, has been fixed as the record date for determination
of shareholders entitled to notice of and to vote at the meeting or any
adjournment thereof. At the close of business on that date, 10,081,307 Common
Shares, par value $.01 per share, of the Company were issued and outstanding.
Each Common Share is entitled to one vote on any matter that properly comes
before the meeting. Cumulative voting is not permitted with respect to the
election of directors. The presence in person or by proxy of the holders of at
least a majority of the Common Shares entitled to be voted at the meeting is
required to constitute a quorum. Shares which are present, or represented by a
proxy, at the Annual Meeting will be counted for quorum purposes regardless of
whether the holder of the shares or proxy fails to specify a choice with respect
to any or all of the proposals or whether a broker with discretionary authority
declines to exercise its discretionary voting authority with respect to any or
all of the proposals (known as 'non-votes').
VOTING AND SOLICITATION
Pursuant to regulations of the Securities and Exchange Commission, boxes
and a clear means are provided on the accompanying proxy card for shareholders
to mark if they wish to withhold authority to vote for one or more nominees for
director, or to vote against or abstain on the other proposal. With regard to
Proposal I, election of directors, applicable Virginia law provides that, if a
quorum is present, directors are elected by a plurality of the votes cast; that
is, the nominee receiving the most votes FOR is elected. With regard to
Proposals II, IV and V, under applicable Virginia law abstentions as well as
non-votes will not be counted in determining votes cast because Virginia law
provides that, if a quorum is present, action on a matter (other than election
of directors) is approved if the votes cast in favor exceed the votes cast
against. Therefore, abstentions and non-voters have no effect on the votes on
this proposal. With regard to Proposal III, applicable Virginia law provides
that the Amendment to the Company's Articles of Incorporation must be approved
by two-thirds of the issued and outstanding shares of the company.
The Company has retained Innisfree M&A Incorporated ('Innisfree') to assist
the Company in connection with its communications with, and solicitation of
proxies from, its shareholders with respect to the Annual Meeting. Innisfree
will receive $ for its services and reimbursement of out-of-pocket
expenses in connection therewith the Company has agreed to indemnify Innisfree
against certain liabilities arising out of or in connection with its engagement.
1
REVOCABILITY OF PROXIES
Shareholders who execute proxies retain the right to revoke them at any
time by giving written notice of revocation to the Secretary of the Company.
Unless so revoked, the shares represented by signed proxies solicited by the
Company will be voted in accordance with the instructions given therein by the
shareholders. Any signed proxy not specifying to the contrary will be voted FOR
the election of the Board of Directors' nominees as directors referred to in
Proposal I and, FOR the ratification of the appointment of BDO Seidman, LLP as
independent auditors for the Company for the fiscal year 1998 referred to in
Proposal V and FOR Proposals II, III and IV. So far as the Company's management
is aware, such matters are the only matters to be acted on at the meeting. As to
any other matter which may properly come before the meeting or any adjournment
thereof, the person named in the accompanying proxy card will vote thereon in
accordance with their best judgment.
2
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding ownership of Common
Shares of the Company at October 31, 1997, by each person who is known by
management of the Company to own beneficially more than five percent of the
Common Shares (setting forth the address of each such person), by each director
and nominee for election as a director, by the Named Executive Officers of the
listed in the 'Summary Compensation Table' set forth herein, and by all
directors and Executive Officers of the Company as a group. Shares issuable on
exercise of options exercisable within 60 days are deemed to be outstanding for
the purpose of computing the percentage ownership of persons beneficially owning
such warrants or options, but have not been deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. Insofar as is
known to the Company, the persons indicated below have sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the notes to the table.
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS(10)
- ------------------------------------------------------------------------ ----------------------- ----------------
Peter C. Madsen, Sterling, Virginia(1).................................. 813,086 8.06%
Robert C. Abbott, Reston, Virginia...................................... 247,408(2) 2.44%
William A. Flanagan, Sterling, Virginia................................. 224,451(3) 2.22%
Edward R. Olson, Reston, Virginia(1).................................... 23,735(4) 0.23%
Thomas G. Amon, New York, New York(1)................................... 13,317(5) 0.13%
Edward C. Bursk, Centreville, Virginia.................................. 34,166(6) 0.34%
Mark H. Rafferty, Centreville, Virginia................................. 121,754(7) 1.20%
Richard L. Apel, Lawrenceville, Georgia................................. 146,563(8) 1.45%
Susquehanna Financial Group, Bala Cynwyd, PA............................ 829,187(9) 7.59%
All Directors and Officers as a group
(eight persons)....................................................... 1,624,678 16.09%
- ------------
(1) Director
(2) Gives effect to 55,000 options owned by Mr. Abbott exercisable within 60
days.
(3) Gives effect to 5,000 options owned by Mr. Flanagan exercisable within 60
days.
(4) Gives effect to 23,333 options owned by Mr. Olson exercisable within 60
days.
(5) Shares are owned by Thomas G. Amon Pension and Profit Sharing Plans as to
which Mr. Amon has no voting or investment power. Gives effect to 6,667
options owned by Mr. Amon exercisable within 60 days.
(6) Gives effect to 33,666 options owned by Mr. Bursk exercisable within 60
days.
(7) Gives effect to 91,667 options owned by Mr. Rafferty exercisable within 60
days.
(8) In connection with the acquisition of Comstat Datacomm Corporation ('CDC'),
the Company issued 146,600 shares of restricted common shares, $.01 par
value (the 'Exchange Shares') and 43,948 of its restrictive common shares,
$.01 par value (the 'Adjustment Shares') in exchange for all the issued and
outstanding shares of CDC which were owned by Richard L. Apel.
(9) Reflects shares issuable upon conversion of securities issued under $5
million private convertible debenture offering to four investors in a
private placement in April, 1997.
(10) Based upon 10,094,065 shares outstanding at October 31, 1997.
------------------------
The Company is unaware of any arrangement the operation of which could at a
subsequent date result in a change in control of the Company.
3
PROPOSAL I
ELECTION OF DIRECTORS
(ITEM 1 ON PROXY CARD)
Each of the four persons listed below has been nominated for election as a
director of the Company to serve until the next Annual Meeting of Shareholders,
or until a successor has been duly elected and qualified. If so authorized, the
persons named in the accompanying proxy will vote for the election of each
nominee. Shareholders who do not wish their shares voted for a particular
nominee may so indicate by striking that nominee's name as instructed on the
proxy card.
The Company has been informed that each nominee is willing to serve as a
director. If any one or more of the nominees should become unavailable to serve
at the time of the Annual Meeting, the shares represented by Proxy will be voted
for the remaining nominees and for any substitute nominees designated by the
incumbent Board of Directors. If no substitute is designated, the size of the
Board may be reduced or votes will be cast according to the judgment in such
matters of the persons voting the proxies. Each nominee for election except Mr.
Rafferty, as director of the Company is an incumbent. The Board knows of no
reason why any of the nominees will be unavailable to serve.
The following lists the nominees for election as directors of the Company,
including the age of each person as of July 15, 1997, the positions with the
Company or principal occupations of each person, certain other directorships
held and the year each person became a director of the Company. The number of
Common Shares of the Company owned beneficially by each person at July 15, 1997,
is set forth beneath the caption 'Security Ownership of Certain Beneficial
Owners and Management' at Page 3.
NOMINEES FOR ELECTION AS DIRECTORS
WITH TERMS EXPIRING AT THE 1998 ANNUAL MEETING
Peter C. Madsen, age 47; Mr. Madsen has been President, Chief Executive
officer and a director of the Company since September 1992. Mr. Madsen was
President of Professional Marketing Corporation, a telecommunications equipment
distributor, from February 1992 to September 1992. From November 1986 to January
1992, he was an officer and director of Newbridge Networks Corporation, a
Canadian telecommunications company, most recently as President of Newbridge
Networks Inc., Newbridge Networks Corporation's United States subsidiary. Mr.
Madsen currently serves as a director of Newbridge Networks Corporation.
Edward R. Olson, age 57, has served as a director since January 1989. From
1990 to present, Mr. Olson has served as the President, Chief Executive Officer
and Chairman of MC Industries, Inc., a fluid hydraulics equipment manufacturer.
Commencing July 1, 1995, Mr. Olson became a principal in KPMG BayMark, LLC. KPMG
BayMark LLC has since been renamed to Dominion Management LLC. For the past five
years, Mr. Olson has served as President of Ed Olson Consulting Group, Ltd., a
management consulting firm. From 1992 to 1993 Mr. Olson was Senior Vice
President, Operations of Audiovox Corporation, a company concentrating in the
marketing and distribution of consumer electronic devices. Mr. Olson is Chairman
and President of York Industries, York, PA and Chairman of S&L Metal Products,
Queens, New York.
Mark H. Rafferty, age 43, has been Vice President, Chief Financial Officer
and Treasurer of the Company since August 1993. From August 1992 to August 1997,
Mr. Rafferty was Vice President, Finance at Newbridge Networks, Inc. From August
1987 through August 1992, Mr. Rafferty was Controller of Newbridge Networks,
Inc.
Thomas G. Amon, age 50, has served as a director since December, 1994. Mr.
Amon has been a partner in the law firm of Amon & Sabatini for the past five
years.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held four meetings during fiscal 1997. All directors
attended each of the meetings of the Board of Directors.
4
The Board of Directors has a standing Audit Committee and Compensation
Committee. The Board of Directors has no nominating committee.
The Audit Committee, consisting of Messrs. Olson and Amon met four times
during fiscal 1997. The function of the Audit Committee is to recommend the
appointment of the independent public accountants, to review the nature and
scope of the services of the independent public accountants, to confer with the
independent public accountants and to review the results of their audit and the
Company's internal controls, and to provide assistance to the Board of Directors
with respect to the corporate and reporting practices of the Company.
The Compensation Committee, consisting of Messrs. Madsen, Olson and Amon
met four times during Fiscal 1997. The function of the Compensation Committee is
to make recommendations to the Board of Directors regarding compensation to be
paid to the Company's executive Officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR ELECTION AS
DIRECTORS LISTED ABOVE.
BOARD REPORT ON EXECUTIVE COMPENSATION
Compensation levels for executive officers are set by the Compensation
Committee of the Board of Directors. The Committee is presently comprised of the
following individuals: Peter C. Madsen, Thomas G. Amon and Edward R. Olson.
Salaries are reviewed annually and are based on individual performance, the
extent of individual responsibility and comparisons with salaries paid in the
industry.
The Company recruits for its executive officer positions from within the
communications industry. In most instances, the source Company is significantly
larger than the Company. It is the policy of the Board of Directors of FastComm
to hire executive officers at levels below that of their current salaries along
with a stock option package intended to make up for the differentiation and to
provide a performance incentive. The Company feels that stock options are an
attractive benefit in that they enhance performance and loyalty at little cost.
The Company believes that the compensation packages offered to its current
employees and prospective employees are consistent with that of the
telecommunications industry.
The Board establishes compensation levels based on experience and
responsibility. No executive officer has received a salary increase during
fiscal year 1997.
The Board granted four executive officers options during fiscal 1997. Two
of these grants were determined by these individuals performance,
responsibility, security and the number of options currently held by these
officers. The two remaining grants were conditions of employment.
The Board adheres to a policy of granting options to executive officers
based upon performance and responsibility. In addition, the Board also considers
the relative importance of the job function being performed and the number of
options currently held by the executive officer.
/s/ Thomas G. Amon, /s/ Edward R. Olson, /s/ Peter C. Madsen
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year, Peter C. Madsen, Edward R. Olson, and Thomas G. Amon as
directors participated in deliberations of the Company's Board of Directors
concerning executive officer compensation and stock option grants, including
their own. Other than the foregoing, none of such directors was party to any
reportable interlock or participation during fiscal 1997. During the fiscal year
ended April 30, 1997, the Company sold approximately $43,000 of product under
normal terms and conditions to Newbridge Networks, Inc., the United States
subsidiary of Newbridge Networks Corporation, a Canadian Telecommunications
Company ('Newbridge'). Peter C. Madsen, President, Chief Executive Officer and a
director of the Company is also a director of Newbridge.
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock with that of the
cumulative total return of the NASDAQ
5
Stock Market -- US Index ('NASDAQ STOCK MRKT -- US') and the NASDAQ
Telecommunications Index ('NASDAQ TELECOM') for the five year period ended on
April 30, 1997. The information below is based on an investment of $100, on
April 30, 1992, in the Company's Common Stock, the NASDAQ STOCK MRKT -- US and
the NASDAQ TELECOM. The Company's Management consistently cautions that the
stock price performance shown in the graph below should not be considered
indicative of potential future stock price performance.
[TO BE PROVIDED]
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid by
the Company to the six (6) named executives (the 'Named Executive Officers') for
services furnished in all capacities to the Company during the fiscal year ended
April 30, 1997, as well as such compensation paid by the Company to the Named
Executive Officers during the Company's two previous fiscal years:
LONG TERM
COMPENSATION
AWARDS
------------
SHARES OF
ANNUAL COMPENSATION OTHER ANNUAL COMMON STOCK
----------------------------- COMPENSATION UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR SALARY($) BONUS($) ($) OPTIONS
- ----------------------------------------------------- ---- --------- -------- ------------ ------------
Peter C. Madsen(2) .................................. 1997 101,757 0 6,613 0
President, CEO and Chairman of the Board 1996 104,196 0 6,219 0
1995 113,344 0 6,219 0
Mark H. Rafferty(3) ................................. 1997 108,503 0 5,824 25,000
Vice President -- Chief Financial Officer 1996 106,207 0 5,824 0
1995 110,825 0 5,824 125,000
Robert C. Abbott(4) ................................. 1997 98,639 0 0 15,000
Vice President -- Engineering Corporate Secretary 1996 95,552 0 0 0
1995 100,750 0 0 50,000
William A. Flanagan(5) .............................. 1997 109,417 0 2,511 0
Vice President -- Marketing and Technology 1996 106,715 0 6,632 15,000
1995 113,913 0 6,632 0
Edward C. Bursk(6) .................................. 1997 52,532 0 2,400 55,000
Vice President -- Sales and Marketing
Richard L. Apel(7) .................................. 1997 25,853 0 1,200 50,000
Vice President
- ------------
The options listed with respect to fiscal year 1995 long-term compensation
awards include options granted upon repricing (and consequent cancellation) of
previously granted options. Options to purchase the following number of shares
granted to the following persons in fiscal year 1995 were issued as a result of
the repricing on September 9, 1994 of previously granted options: Mr.
Rafferty -- 75,000 (all of which were originally granted in fiscal year 1994);
Mr. Abbott -- 50,000 (all of which were originally granted in fiscal year 1994).
The repriced options were conditioned upon waiver of previously granted options
and acceptance of a new vesting period.
(1) Automobile benefit.
(2) At April 30, 1997, Mr. Madsen held 751,086 restricted shares of Common Stock
with a market value of $3,755,430 at that date; Mr. Madsen waived the
payment of $28,522 of his salary in the 1994 fiscal year.
(3) At April 30, 1997, Mr. Rafferty held 28,088 restricted shares of Common
Stock with a market value of $140,435 at that date.
(4) At April 30, 1997, Mr. Abbott held 192,408 restricted shares of Common Stock
with a market value of $962,040 at that date.
(5) At April 30, 1997, Mr. Flanagan held 218,451 restricted shares of Common
Stock with a market value of $1,097,255 at that date.
(6) Mr. Bursk commenced working for the Company in November, 1996. At April 30,
Mr. Bursk held 500 restricted shares of Common Stock with a market value of
$2,500.
(7) Mr. Apel commenced working for the Company in February, 1997. At April 30,
Mr. Apel held 146,600 shares of Common Stock with a market value of
$733,000.
7
FISCAL 1997 OPTION GRANTS
The following table sets forth information concerning grants of stock
options to the Named Executive Officers made pursuant to the Company's 1992
Stock Option Plan during the fiscal year ended April 30, 1997:
PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS EMPLOYEES IN BASE PRICE
NAME GRANTED(#) FISCAL YEAR ($/SH)
- ------------------------------ ---------- ------------- -----------
Peter C. Madsen............... 0 -- --
Mark H. Rafferty.............. 25,000 4.86 6.50
Robert C. Abbott.............. 15,000 2.92 12.00
William A. Flanagan........... 0 0 --
Thomas G. Amon................ 10,000 1.95% $ 15.63
Edward R. Olson............... 10,000 1.95% $ 15.63
Edward C. Bursk............... 55,000 10.70% $ 6.50
Richard L. Apel............... 50,000 9.73% $ 6.82
EXPIRATION
NAME DATE 5%($) 10%($)
- ---------------------------------------- ------- --------
Peter C. Madsen............... -- -- --
Mark H. Rafferty.............. 12/23/01 44,750 99,250
Robert C. Abbott.............. 07/14/01 49,800 109,250
William A. Flanagan........... -- -- --
Thomas G. Amon................ 05/08/01 $43,150 $ 95,450
Edward R. Olson............... 05/08/01 $43,150 $ 95,450
Edward C. Bursk............... 12/23/01 $98,450 $218,350
Richard L. Apel............... 01/30/02 $94,000 $208,000
- ------------
The exercise price of each option may not be less than 100% of the fair market
value of the stock on the date of the grant for incentive options or 85% of such
fair market value for non-qualified stock options, as determined by the Board of
Directors. Options vest over a three year period and expire five years from date
of grant and, in most cases, upon termination of employment.
FISCAL 1997 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of
stock options during the fiscal year ended April 30, 1997 by each of the Named
Executive Officers and the fiscal year end value of unexercised options held by
such persons:
SHARES UNDERLYING
SHARES UNEXERCISED OPTIONS AT FISCAL
ACQUIRED ON VALUE YEAR-END(#)
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE
- ------------------------------ ----------- ----------- -----------------------------
Peter C. Madsen............... -- -- 0 0
Robert C. Abbott.............. -- -- 33,333 31,667
William Flanagan.............. -- -- 5,000 10,000
Thomas G. Amon................ 3,333 13,334
Edward R. Olson............... -- -- 16,666 13,334
Mark H. Rafferty.............. -- -- 41,667 66,667
Edward C. Bursk............... 11,600 89,125 3,699 70,001
Richard L. Apel............... -- -- -- 50,000
VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE
- ----------------------------------------------------------
Peter C. Madsen...............$ 0 $ 0
Robert C. Abbott..............$ 20,833 $10,417
William Flanagan..............$ 0 $ 0
Thomas G. Amon................$ 5,833 $ 5,835
Edward R. Olson...............$ 11,666 $ 5,835
Mark H. Rafferty..............$ 26,042 $26,042
Edward C. Bursk...............$ 208 $ 7,500
Richard L. Apel...............$ 0 $ 0
EMPLOYMENT AND CONTROL ARRANGEMENTS
Effective September 18, 1992 the Company, Mr. Robert N. Dennis and Mr.
Edward R. Olson, as the 'Current Directors' therein, and Mr. Peter C. Madsen
entered into an employment agreement (the 'Employment Agreement') regarding the
terms of Mr. Madsen's employment by the Company and the scope of the
relationships among the parties to the Employment Agreement.
Pursuant to the Employment Agreement (i) Mr. Madsen was elected President
and Chief Executive officer of the Company for an initial term expiring on
January 31, 1995 at an initial base salary of $100,000 per year, (ii) Mr. Madsen
was granted an option to purchase up to 425,000 shares of Common Stock of the
Company at an exercise price of $1,09375 per share upon certain terms and
conditions, and (iii) Mr. Madsen and Mr. Peter Sommerer were elected directors
of the Company to fill two vacancies then existing on the Board of Directors.
Under the Employment Agreement, Mr. Madsen has been granted full control of
and authority over the operations of the Company, subject to the general
oversight of the Board, and the Current
8
Directors agreed not to take any action inconsistent with their respective
obligations thereunder. The Employment Agreement and the related actions
resulted in an effective change in control of the Company away from Mr. Dennis
to Mr. Madsen. The Employment Agreement, which currently expires on January 31,
1998, is renewable thereafter on a year to year basis.
DIRECTOR'S COMPENSATION
Directors receive no salary for their services as such; however, the Board
of Directors has authorized payment of reasonable expenses incurred by
non-employee directors in connection with attendance at meetings of the Board of
Directors. Further, members of the Company's Board of Directors are granted
options to purchase common shares pursuant to the Company's 1992 Stock Option
Plan. During Fiscal Year 1997, the Company granted options to purchase 10,000
shares each to two of its directors. The Chairman of the Board receives no
compensation for serving in such capacity.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal years ended April 30, 1996 and 1997 and the six months
ending October 31, 1997, the Company sold approximately $158,000 $43,000, and
$10,620 respectively of product under normal terms and conditions to Newbridge
Networks, Inc. ('NNI') a United States subsidiary of Newbridge Networks
Corporation, a Canadian Telecommunications Company ('Newbridge'). FastComm sells
to NNI under net 30 day terms with prompt payment discounts. Such terms are
consistent with that of similar customers. Title passes on shipment of product.
Under the terms of the contract, NNI may return purchased and paid for (during
the previous six month period) but unused products to FastComm for either
warranty revalidation and/or revision level change (hardware or firmware). Peter
C. Madsen, President, Chief Executive Officer and a director of the Company is
also a director of Newbridge.
The Company paid the law firm of Amon & Sabatini $154,000 in the fiscal
year ended April 30, 1996 and $183,000 in the fiscal year ended April 30, 1997
and $48,500 for the sixth month period ended October 31, 1997. Thomas G. Amon, a
Director of the Company, since December 1994, is a partner of Amon & Sabatini.
On February 13, 1997, FastComm entered into an agreement whereby it leased
a facility in Georgia that is owned by Richard L. Apel. Mr. Apel is a Vice
President of the Company. The Company paid$22,0000 to Mr. Apel in the fiscal
year ended April 30, 1997 and $43,200 for the six month ending October 31, 1997.
Also in connection with the acquisition of Comstat, Mr. Apel was loaned
$300,000. The loan bears interest at 2 1/2 above the prime lending rate and is
secured by a pledge of certain shares the Company's stock issued to him in
connection with this transaction.
The terms of the transactions described above were negotiated at arms
length such that the terms were as favorable to the Company as could have been
obtained from an unaffiliated third party.
The Company has entered into separate indemnification agreements with each
of its directors and executive officers that may require the Company, among
other things, to indemnify them against certain liabilities that may arise by
reason of their status or service as directors or officers.
PROPOSAL II
AUTHORIZATION OF SHARES OF PREFERRED STOCK
(ITEM 2 ON PROXY CARD)
The Board of Directors has unanimously approved, and recommends to the
shareholders that they adopt an amendment to Article 3 of the Articles of
Incorporation that would authorize 100,000 shares of preferred stock with such
relative rights, preferences, voting and class or series designations as shall
be determined by the Board of Directors.
The Company's Articles of Incorporation currently authorize the issuance of
25,000,000 shares of Common Stock and no Preferred Shares. No holder of Common
Stock has any preemptive rights.
9
Under the proposed amendment, in creating a new class of series of
Preferred Stock, the Board of Directors would set the rights of such class or
series as to dividends, voting, preferences, liquidations and redemption. This
would enable the Board of Directors to act promptly in issuing a new class or
series of Preferred Stock and to tailor the terms of such class or series to the
transaction or circumstances to which such issuance relates. The Company will
from time to time consider issuing shares of preferred stock or rights to
acquire preferred stock.
The full text of Proposal Two is attached to this Proxy Statement as
Exhibit A, which shareholders are urged to read carefully.
Effective April 9, 1997, the Company issued, in a private placement,
$5,000,000 principal amount of Debentures to four private investors (the
'Private Placement Investors'). The Debentures are convertible into shares of
the Company's common stock at, depending on the time of conversion, a fixed or
variable conversion price. The Securities Purchase Agreement (the 'Agreement')
with the Private Placement Purchasers provides, in part that the Debentures are
also convertible into 5,000 shares of to-be-created class of Class 'A' Preferred
Stock of the Company, if authorized by the Board of Directors and the
Shareholders of the Company. If so authorized the Preferred Shares, will be
convertible into Common Shares and Warrants upon the terms and subject to the
limitations and conditions set forth in a Certificate of Designation,
Preferences and Rights attached hereto as Exhibit B.
Upon approval of the Amendment to the Company's Articles of Incorporation,
to create the new class of Preferred Stock, and upon the fulfillment of certain
other conditions, the Company has the right to require the conversion of all of
the outstanding principal amount of Debentures into that number of shares of the
to-be created series of the Company's Preferred Stock having the designations
preferences and rights set forth in the Certificate of Designations, Preferences
and Rights which have a total face amount equal to such principal amount.
Dividends. Holders of the Preferred Stock are entitled to receive
dividends, out of funds legally available therefor at the rate of 5% per annum
on the face value of such shares, payable at the time of conversion in cash or
shares of common stock at the option of the Company. The amount of dividends
payable in respect of each share of Preferred Stock will be equal to the result
obtained by multiplying (i) the number of shares (including fractions) of the
Company's Common Stock, into which such shares of Preferred Stock is convertible
(whether or not shareholder approval of the convertability of the Preferred
Stock has occurred) by (ii) the amount of dividends declared and paid on each
share of the Common Stock. No dividend may be paid or declared on any share of
the Common Stock, unless a dividend, payable in the same consideration and
manner, is simultaneously paid or declared, as the case may be, on each share of
Preferred Stock in an amount determined as set forth above; nor may any dividend
be paid or declared on any share of Preferred Stock unless a dividend, payable
in the same consideration and manner, is simultaneously paid or declared, as the
case may be, on each share of the Common Stock, in each case without preferences
or priority of any kind.
Liquidation Preferences. Upon any liquidation, dissolution or winding up of
the Company, no distribution shall be made to the holders of shares of stock
ranking junior to (i) the Series A Preferred, unless, prior thereto, the holders
of shares of Series A Preferred shall have received per share. Following the
payment of the full amount of such liquidation preferences, no additional
distributions shall be made to the holders of shares of the Preferred Stock.
Conversion Rights and Antidilution Provisions. If the holders of the Common
Stock approve Proposals 2, 3 and 4, as applicable, shares of Preferred Stock
will become convertible, in whole or in part, at the option of either the holder
or the Company, into Common Stock, at any time or from time to time. The
conversion rate will be ten (10) shares of Common Stock for each share of
Preferred Stock, subject to adjustment for any subsequent subdividions or
combinations of the outstanding shares of Common Stock into a different numbr of
shares of Common Stock. In the event of any business combination transaction
involving the Company, each share of Preferred Stock will thereafter be
convertible into, in lieu of Common Stock, the same kind and amounts of
securities or other assets, if any, which were issuable or distributable to the
holders of shares of outstanding Common Stock in connection with such business
combination transaction.
Redemption. The Preferred Stock is not redeemable.
10
Voting Rights. The holders of Preferred Stock are entitled to that number
of votes per share equal to the number of shares of Common Stock into which such
share of Preferred Stock would be convertible (upon shareholder approval) at all
meetings of stockholders of the Company; provided, however, that shares of
Preferred Stock are not be entitled to vote on the approval of the issuance of
Common Stock upon conversion of the Preferred Stock.
PURPOSES AND EFFECTS OF PROPOSAL II
The financial statements contained in the Company's Annual Report for the
year ending April 30, 1997, on pages F-1 through F-7 of the Annual Report, are
incorporated herein by reference, as are the supplementary financial information
contained on pages F-8 through F-27, management's discussion and analysis of
Financial condition and results of operations on pages 16 through 20, and the
changes in and disagreements with accountants on accounting and financial
disclosure on page 27. Representatives of the principal accountants for the
current year and for the most recently completed fiscal year are expected to be
present at the shareholders meeting, will have an opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
The Board of Directors believes that the authorization of shares of
preferred stock as contemplated by Proposal II would benefit the Company and its
shareholders by giving the Company needed flexibility in its corporate planning
and in responding to developments in the Company's business, including possible
financing and acquisition transactions, stock dividends and other general
corporate purposes such authorized shares available for issuance in the future
would give the Company greater flexibility and allow shares of preferred stock
to be issued without the expense and delay of a special shareholder meeting. The
Company does not have any present plan or agreement for the issuance for
Preferred Stock, other than to the Private Placement Investors.
Except as otherwise required by applicable law or regulation, the shares of
preferred stock to be authorized in Proposal II will be issuable without further
authorization by vote or consent of the shareholders and on such terms and for
such consideration as may be determined by the Board of Directors.
The proposed Preferred Stock Amendment will give the Board of Directors the
express authority, without further action of the stockholders, to issue shares
of Preferred Stock from time to time in one or more series and to fix before
issuance with respect to each series (i) the designation and the number of
shares to constitute each series, (ii) the liquidation rights and preferences,
if any, (iii) the dividend rights (which could be senior to the Common Stock)
and interest rates, if any, (iv) the rights and terms of redemptions, (v)
whether the shares of Preferred Stock are to be convertible or exchangeable into
shares of Common Stock or other securities of the Company, and the rates
thereof, (vii) any limitation on the payment of dividends on the Common Stock
while any shares of Preferred Stock are outstanding, (viii) the voting power, if
any, of the shares of Preferred Stock in addition to the voting rights provided
by law, which voting power may be general or special, and (ix) such other
provisions as will not be inconsistent with the Certificate. All the shares of
any one series of Preferred Stock will be identical in all respects. Holders of
any series of Preferred Stock, when and if issued, may have priority claims to
dividends and to any distribution upon liquidation of the Company, and may have
other preferences over the Common Stock, including a preferential right to elect
directors in the event that Preferred Stock dividends (if the Preferred Stock
carries a dividend) are not paid for a specified period.
The specific terms of any Preferred Stock to be authorized pursuant to the
Preferred Stock Amendment (other than the Preferred Stock, the terms of which
are described above) will depend primarily on market conditions, and other
factors existing at the time of issuance. The Company does not intend to issue
any Preferred Stock except on terms which it deems to be in the best interests
of the Company and its stockholders. The Board of Directors currently intends to
issue shares of Preferred Stock only in conjunction with the Agreement. However,
the Board of Directors may, in its discretion, determine to issue shares of
Preferred Stock for other proper corporate purposes as discussed above. The
Board of Directors has considered the potential disadvantages to the issuance of
Preferred Stock (such as the negative impact a Preferred Stock dividend may have
on the Company's earnings per share, if any, the liquidating preference the
Preferred Stock would have over the Common Stock and the potential dilution of
any stockholders' equity to the extent that Preferred Stock, when and if issued,
may
11
be redeemable or convertible into Common Stock); however, the Board of Directors
believes that the advantages of future flexibility afforded by the ability to
issue Preferred Stock outweigh the disadvantages, and would be in the best
interests of the Company and its stockholders.
It is not possible to state the precise effects of the authorization of the
Preferred Stock upon the rights of the holders of Common Stock until the Board
of Directors determines to issue Preferred Stock and sets the respective
preferences, limitations and relative rights of the holders of each class or
series of Preferred Stock so issued. However, such effects might include (i)
reduction of the amount otherwise available for payment of dividends on the
Common Stock, to the extent dividends are payable on any issued Preferred Stock,
(ii) restrictions on dividends on the Common Stock, (iii) dilution of the voting
power of the Common Stock to the extent that the Preferred Stock has voting
rights, (iv) conversion of the Preferred Stock into Common Stock at such prices
as the Board determines, which could include issuance at or below the fair
market value or original issue price of the Common Stock, and (v) the holders of
Common Stock not being entitled to participate in the Company's assets upon
liquidation until satisfaction of any liquidation preference granted to holders
of the Preferred Stock.
The Board may determine that any particular series of the proposed
Preferred Shares will rank junior to, on a parity with, or senior to any other
series of Preferred Shares in respect of dividends and liquidation rights. It is
not expected that the authorization and issuance of preferred Shares will have
an adverse affect upon the rights of existing shareholders. Common Shareholders
have no preemptive rights and accordingly, have no preferential rights to
purchase any of the Company's Common Shares or Preferred Shares in order to
maintain their proportionate ownership. Therefore, the general effect of the
issuance of Preferred Shares, as well as additional issuances of Common Shares,
would be to dilute the present voting power of the current holders of Common
Shares.
The holders of Preferred Shares may receive preferences in the event of
dissolution, liquidation or winding up of the Company equal to the purchase
price per share plus declared (or cumulative) but unpaid dividends, if any. The
right of Common Shareholders to distribution of the Company's assets will
therefore be diminished. When considering the issuance of the Preferred Shares,
the Board of Directors will consider the above-described general effect upon the
Common Shareholders. The board of Directors does not intend to issue any
Preferred Shares, except on terms that the Board of Directors deems to be in the
best interests of the Company and its then existing shareholders.
The issuance of shares of preferred stock could adversely affect the rights
of the Company's common shareholders, since the dividend and liquidation rights
of the common shareholders will generally be subordinate to the rights of
preferred shareholders.
The Board of Directors could use preferred stock to discourage an attempt
to change control of the Company, even though a change in control might be
perceived as desirable by some shareholders, by, among other things selling a
substantial number of shares of preferred stock to persons who have an
arrangement with the company concerning the voting of such shares, or by
distributing shares of preferred stock, or rights to receive such shares, to the
shareholders. In this respect, certain corporations have issued as a dividend to
their common shareholders shares of preferred stock or rights to acquire shares
of preferred stock having terms designed to encourage negotiated rather than
unilateral takeover proposals and to protect against the adverse consequences of
certain abusive takeover tactics such as open market accumulation programs and
partial and front end loaded takeovers and freezeouts. The shares of authorized
preferred stock would be available for such purposes and the Board of Directors
may from time to time consider issuing shares of preferred stock for such
purposes. The ability to issue shares of preferred stock also would allow the
Board of Directors to issue shares only to shareholders supportive of
management's position. This could provide management with the means to block a
business combination considered desirable by some shareholders. In addition, the
Board could authorize the issuance of a series of preferred stock that votes as
a class, either separately or with the holders of Common Stock, on any merger,
sale or exchange of assets by the Company or any other extraordinary corporate
transaction.
If the Company's shareholder's fail to approve the issuance of Preferred
Stock, the Debentures would continue to be convertible into shares of common
stock and there would be no material adverse effect on the Company's financial
condition.
12
The proposed amendment to the Articles of Incorporation is permitted under
Virginia law and is consistent with the rules of NASDAQ, upon which the
Company's Common Stock is listed and traded.
VOTE REQUIRED
Under Virginia law, more than two-thirds of the outstanding shares of the
Company's Common Stock must approve Proposal II. Abstentions and broker shares
that are not voted on the matter and will have the same effect as a negative
vote.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT OF THE COMPANY'S
ARTICLES OF INCORPORATION IS IN THE BEST INTERESTS OF BOTH THE COMPANY AND ITS
SHAREHOLDERS AND RECOMMENDS THAT THE SHAREHOLDERS VOTE IN FAVOR OF PROPOSAL II.
PROPOSAL III
APPROVAL OF THE ISSUANCE OF SHARES OF COMMON STOCK UNDERLYING THE CORPORATION'S
CONVERTIBLE DEBENTURES (OR CONVERTIBLE PREFERRED STOCK) AND CERTAIN WARRANTS.
(ITEM 3 ON PROXY CARD)
On April 9 1997, the Corporation issued and sold an aggregate of $5,000,000
principal amount of convertible debentures (which is convertible into a New
Series A Preferred Stock upon Shareholders Approval) and Warrants to purchase up
to 1,160,622 shares of Common Stock to a group of institutional investors for an
aggregate purchase price of $5.0 million. As discussed under Proposal II, the
New Preferred Stock is convertible into common stock at a price which is equal
to or less than market price of the Common Stock at the time of conversion.
Moreover, the Corporation is required to pay the 5% premium on the New Preferred
Stock in the form of Commons Stock at the time of conversion. Because the
conversion rates applicable to the New Preferred Stock fluctuate with the market
price of the Common Stock, the Corporation cannot determine the exact number of
shares which will be issued upon conversion of and as dividends on the New
Preferred Stock.
In connection with the issuance of the New Preferred Stock, the Corporation
agreed to seek the approval of its Stockholders for the issuance of in excess of
2,016,260 shares of Common Stock (20% of the number of shares of Common Stock
outstanding on the first assumed date of issuance of the New Preferred Stock)
upon (i) the conversion of, and as dividends on, the New Preferred Stock and
(ii) the exercise of warrants issued in connection with the issuance of the New
Preferred Stock. These shares have been Registered by the Securities & Exchange
Commission by registration statement dated May 20, 1997.
This proposal is being presented to the Corporation's stockholders in
accordance with Rule 4460(i) of the NASDAQ. Rule 4460(i) requires stockholder
approval for the issuance of shares of common stock in a transaction or series
of transactions involving (i) the sale or issuance by the issuer of common stock
(or securities convertible into or exercisable for common stock) at a price less
than the greater of book or market value which together with sales by officers,
directors or substantial shareholders of the Corporation equals 20% or more of
the common stock or 20% or more of the voting power outstanding before the
issuance; or (ii) the sale or issuance by the issuer of common stock (or
securities convertible into or exercisable for common stock) equal to 20% or
more of the common stock or 20% or more of the voting power obtained before the
issuance for less than the greater of book or market value of the stock.
This proposal will be effective only if proposal II is approved by
shareholders.
Based on the market price for the Corporation's Common Stock on October 31,
1997 of $5.26 per share, the New Preferred Stock would be convertible into
1,056,913 shares of Common Stock. Moreover, an additional 422,765 shares of
Common Stock are issuable upon exercise of warrants issued in connection with
the New Preferred Stock (assumes maximum issuance). Such shares represent in the
aggregate 10.47% of the number of shares of Common Stock issued and outstanding
on October 31, 1997 and represent in the aggregate 10.47% of the Corporation's
voting power outstanding on
13
October 31, 1997. Additional shares of Common Stock may be issued as dividends
on the New Preferred Stock, which issuances will increase these percentages.
Under the Certificate of Designations, Preferences and Rights of Series 'A'
Convertible Preferred Stock, included herein as Exhibit B, the New Preferred
Stock is convertible into the common shares at a variable or fixed rate
dependent upon when the conversion occurs and the price at which the outstanding
Common Stock is trading prior to the conversion. If the conversion occurs prior
to October 6, 1997, the conversion price is the average of the closing bid
prices for the Common Stock for ten (10) consecutive trading days ending the day
preceding the conversion. If the conversion occurs on or after October 6, 1997,
the conversion price is the lower of $7.54 or the conversion price as computed
above multiplied by a fixed percentage. For example, assuming a conversion of
$100,000 principal amount of Debentures on October 6, 1997, the number of shares
to be issued would be 20,505 ($100,000 divided by the conversion price of
$5.41875 times 90%) and 4,101 warrants to purchase common stock.
The issuance of additional common shares could have a dilutive effect on
the value of presently outstanding shares. For instance, if all Debentures were
converted on October 31, 1997, 1,056,913 shares ($5,000,000 divided by $5.2564
times 90%) and 422,765 warrants to purchase shares would be issued. This would
have resulted in an approximate ten percent (10%) dilution in the number of
shares outstanding at such date (10,094,065 outstanding before dilution;
11,152,266 shares after dilution) and an approximately $0.065 per share dilution
on such date ($5.375 closing bid price on October 31, 1997).
This investment in New Preferred Stock provided the Corporation with an
additional $5.0 million in working capital. Exercise of the Warrants issued in
connection with the New Preferred Stock will provide the Corporation with an
additional $2.0 million in working capital. Such funds are essential to fund the
Corporation's continued expansion of the Corporation's business domestically and
into countries that may provide opportunities for continued commercial expansion
of the Corporation's integrated frame and voice data relay devices.
In the event the Corporation does not receive approval by the stockholders
of this Proposal III, the Corporation would be required to redeem all shares of
Common Stock issuable upon conversion of the New Preferred Stock or exercise of
the warrants to the extent such shares exceeds 20% of the issued and outstanding
Common Stock. Such redemption would require the Corporation (i) to pay, in cash,
an amount equal to 120% of the market price for the shares of Common Stock that
investors in the New Preferred Stock were not able to convert due to such
limitation and (ii) to issue one warrant for every 2 1/2 shares redeemed for
each share of new Preferred Stock redeemed. In the alternative, the Corporation
may issue other securities with the same economic value (before taxes) as the
securities redeemed.
In light of the redemption obligation, failure to obtain stockholder
approval pursuant to NASDAQ Rule 4460(i) would adversely affect the
Corporation's financial position. The resulting reduction in working capital
could cause the Corporation to delay the commercial roll-out of the
Corporation's new products or to forego opportunities for expansion in the
marketplace.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS OF
COMMON STOCK VOTE IN FAVOR OF THE PROPOSAL III.
PROPOSAL IV
EMPLOYEES STOCK PURCHASE PLAN
On March 14, 1997, the Board of Directors of the Company subject to
shareholder approval, adopted the Employees' Stock Purchase Plan (the 'Plan'),
the text of which is set forth in Exhibit C. The purpose of the Plan is to
encourage ownership of Common Stock of the Company by its employees and to
provide additional incentive to those employees to remain with the Company and
promote the success of its business.
14
GENERAL
The Plan permits full-time employees whose customary employment is for more
than 1,000 hours per year (to whom there are at present approximately
seventy-five) to purchase shares of Common Stock in an aggregate amount not
exceeding 100,000 shares (subject to adjustment in the event of stock dividends,
split-ups, recapitulizations or combinations) through payroll deductions and
voluntary participant contributions of up to $10,000 per year. Participation in
the Plan is entirely voluntary. Shares will be purchased either on the open
market or from the Company on the last day of each payroll period. Shares
purchased from the Company will be purchased at a price equal to the average of
the high and low sales prices of the Common Stock on the NASDAQ, on the day most
recently preceding the purchase date on which reported sales of Common Stock on
the NASDAQ were effected.
In the sole discretion of the Board of Directors, the Company may
contribute to a participant's account on any purchase date an amount up to but
not exceeding such participant's payroll deduction for the payroll period ending
on such purchase date. Such contribution may be in the form of a cash
contribution, in the event that shares purchased for such participant are
purchased in an open market transaction or in the form of a price discount, in
the event that such shares are purchased from the Company. The Board does not
presently intend to make contributions although it may elect to do so in the
future.
The Company will hold stock certificates representing shares purchased
under the Plan until a participant requests delivery of the certificates. Shares
so held will be enrolled in the Company's Dividend Reinvestment Plan. Any cash
dividends paid on such shares will be used to purchase additional Commons Stock
under that Plan.
A participant may terminate or suspend his participation in the Plan at any
time. An employee's participation also terminates if he ceases to be employed by
the Company for any reason, including death or retirement. Participants may not
sell, assign or transfer their interests in the Plan or rights thereunder to any
other person.
ADMINISTRATION
The Plan is administered by the Compensation Committee, which has duel
power and authority to decide all questions regarding its construction and
incorporation, The Compensation Committee may also pass upon and decide cases
presenting unusual circumstances and in so doing, shall not in a
nondiscriminatory manner consistent with, and to further the purposes of, the
Plan. All decisions of the Compensation Committee shall be final and binding
upon all persons.
AMENDMENT AND TERMINATION OF THE PLAN
The Plan may be amended or terminated by the Board of Directors, but no
amendment which is required to be approved by the shareholders of the Company as
a condition of exemption of purchases from Section 16(b) of the Securities and
Exchange Act of 1934 shall be effective until it is so approved.
EXPENSES
This Company will bear all expenses of administering the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL IV.
PROPOSAL V RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 5 ON PROXY CARD)
The Board of Directors has appointed BDO Seidman, LLP as independent
certified public accountants to examine the financial statements of the Company
for the fiscal year ending April 30, 1998, and to perform other appropriate
accounting services.
A proposal will be presented at the meeting to ratify the Board's
appointment of BDO Seidman, LLP as the Company's independent certified public
accountants. If the appointment is not ratified by the shareholders represented
at the meeting, the Board of Directors may reconsider its recommendation. One or
more representatives of BDO Seidman, LLP are expected to be present at the
Annual
15
Meeting and have an opportunity to make a statement and/or respond to
appropriate questions from Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL V.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and with the National Association of Securities Dealers, Inc. Automated
Quotations (NASDAQ) system. Officers, directors and greater than ten percent
shareholders are required by regulation to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during its fiscal year
ended April 30, 1997, all filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with.
OTHER BUSINESS
Management of the Company knows of no other business which may come before
the meeting. However, if any additional matters are properly presented at the
meeting, it is intended that the persons named in the enclosed proxy, or their
substitutes, will vote such proxy in accordance with their judgment on such
matters.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Shareholder proposals intended for presentation at the Company's next
Annual Meeting must be received by the Company at its principal offices in
Sterling, Virginia not later than July 5, 1998.
ANNUAL REPORT TO SHAREHOLDERS
Enclosed with this Proxy Statement is the Annual Report to Shareholders for
the fiscal year ended April 30, 1997, including audited consolidated financial
statements for the year then ended, which includes the Company's Annual Report
on Form 10-K as filed with the Securities and Exchange Commission. The Annual
Report is not incorporated in the Proxy Statement and is not to be considered a
part of the soliciting materials.
FASTCOMM COMMUNICATIONS CORPORATION
The Board of Directors
Sterling, Virginia
, 1997.
16
APPENDIX 1 -- PROXY CARD
FORM OF PROXY
The undersigned hereby appoints Peter C. Madsen, Mark H. Rafferty, and
Robert C. Abbott and each or any of the, proxy for the undersigned, with power
of substitution to vote all the shares of Common Stock of FastComm
Communications Corporation held of record by the undersigned on September 30,
1997, at the Annual Meeting of Shareholders to be held at 9:00 a.m., November
10, 1997, and at any adjournments thereof, upon the matters designated on the
other side and as more fully set forth in the Proxy Statement and for the
transaction of such business as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed by
the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS, 2, 3, 4 AND 5.
1. Election of directors for one year terms expiring at the 1998 annual
meeting:
[ ] FOR Nominee: Peter C. Madsen, Edward R. Olson, Mark H. Rafferty,
Thomas G. Amon
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
WRITE EACH SUCH NOMINEE'S NAME IN THE FOLLOWING SPACE:
_________________________________________________________________________
[ ] WITHHOLD AUTHORITY: To vote for all such nominees
2. Proposal to amend Articles of Incorporation for authorization of 100,000
shares of Preferred Stock:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the issuance of shares of Common Stock underlying
Convertible Debentures and certain warrants
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to adopt and employee Stock Ownership Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to approve the appointment of BDO Seidman, LLP. as the
independent auditors for the Company
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing in a representative capacity,
please give full title as such. If a corporation, please sign in
corporation's name by President or other authorized person. PLEASE MARK,
SIGN, DATE AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Date: ............................
..................................
Signature(s)
..................................
Signature(s)